Govt, microfinance victims ink 5-point agreement

 Kathmandu, July 31

The dialogue between the government and the team comprising the struggle committee against microfinance and financial exploitation concluded with 5-point agreement that included the implementation of the report prepared in 2024 by the task force established to propose appropriate options for resolving the problems faced by microfinance.

Responding to the protests and hunger strikes organised by the microfinance victims, Finance Minister Dr. Swarnim Wagle, through a ministerial decision, had formed a committee on Thursday to hold talks with protestors. The two sides negotiated for two days to reach the agreement. 

With the positive conclusion of the negotiation, all protest programmes and hunger strikes being conducted across the country are called off on Friday.

The two sides agreed that a recommendation would be submitted to the Ministry of Finance (MoF) for the execution of the report prepared by the task force in August 2024, together with an implementation plan, within 15 days.

"The report shall recommend practical and implementable measures, including a rehabilitation programme for distressed microfinance borrowers and a review of the existing provisions relating to blacklisting and the auction of collateral," read the agreement.

Likewise, the two parties agreed to fully implement the Operational Guidelines, 2081issued by the NRB for Class 'D' licensed microfinance financial institutions, and the central bank will strictly monitor compliance with these guidelines.

The Ministry of Home Affairs will instruct the District Administration Offices to initiate legal proceedings, in accordance with prevailing laws, against unlawful debt recovery practices by MFIs. Such practices include subjecting borrowers to harassment, removing household goods from their homes, and stationing staff at borrowers' residences to intimidate or coerce them until loan instalments are paid, read the agreement.

Making a ministerial decision on Thursday, FM Dr. Wagle had constituted a negotiation team under the coordination of Mahesh Acharya, Joint Secretary at MoF.

The committee comprised Binod Kumar Bhattarai, Joint Secretary at the Ministry of Law, Justice and Parliamentary Affairs, Suresh Panthi, Joint Secretary at the Ministry of Home Affairs, Ramu Paudel, Executive Director at the Nepal Rastra Bank, and Bolraj Acharya, Under Secretary at the MoF.

Microfinance victims had been organising demonstrations and hunger strikes since Tuesday demanding the government to implement study reports prepared on microfinance regulations and reforms.

They were also demanding to cease the auction of land collateral, fair judicial resolution for predatory loan recovery by the microfinance institutions, bring the interest rates down and remove hidden service charges.

 

Recommendations of the task force

The task force in 2024 led by then Deputy Governor of the Nepal Rastra Bank (NRB) Dr. Neelam Dhungana Timsina had recommendations actions that were to be addressed by the government, the central bank, the microfinance institutions (MFIs), and the members of the MFIs.

The government was recommended to make arrangements to manage the financial transactions of the Savings and Credit Cooperatives (SACOS) as their borrowers of the MFIs were facing difficulties due to the loans taken from the SACOS and MFIs. According to it, no other organisations should be allowed to do business related to microfinance except the MFIs licensed by the NRB.

It suggested the central bank to ask the MFIs to collect data of their borrowers who are in trouble and have defaulted their loans. It was to be performed within a maximum of 60 days.

Likewise, the task force suggested the MFIs not to apply any form of pressure or mental torture on the members who failed to pay the principal and interest of loans. Recommendations for the members of the MFIs included obtaining loan from only one company, utilise the loan for the said purpose and pay the instalments regularly from the cash flow of the project.

Earlier, on March 2, 2024, similar negotiation was made between a committee led by senior MoF Official and the representatives of microfinance and financial institution victims which was concluded with 6-point agreement.

The task force led by Dr. Timsina was formed to find solutions to the agreement.

Currently, there are 51 MFIs in Nepal with 4,982 branches (about 44% of all banks and financial institutions) by mid-April this year.  They have mobilised above Rs. 181 billion in deposits and savings and above Rs. 212 billion in borrowings. More than 3.2 million people have obtained loan from the MFIs. 

Published in The Rising Nepal daily on 1 August 2026.